Under The Hood: Paddy from Punchy

Hey Paddy! Would love to start with an overview of the brand - especially going into some of the recent decisions about focusing exclusively on soft drinks. 
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When we started Punchy, it was because we noticed that there were very few low/no-alcohol beverage companies which connected with young people effectively - which is where we see the biggest shift away from alcohol.

So our initial concept was alcoholic and non-alcoholic drinks, to give our customers a choice, whatever mood they might be in. And that worked well because Gen Z & millennials are often on the spectrum of drinking alcohol - they’re not necessarily completely sober, and mostly they’re not binge drinkers either. They’re in the middle - and that’s where we fit in. Our hard, ready-to-drink beverages were perfect for festivals and retail, and our soft drinks were our big omnichannel play. They could be sold anywhere from a coffee shop, to a michelin star restaurant. 

But when Covid hit, that pretty much decimated our hard-drinks business. Our channels were non-existent. Festivals weren’t happening and retail was under immense pressure. So that’s when we made the decision to focus on the softs. It’s massively simplified our business and it's one of the best business decisions we’ve ever made. 

Tell me about this recent growth spurt then. Was it all tied to the shift in focus? 

We've managed to grow about 140%, two years in a row now. That definitely lines up with our shift in focus 18 months ago - but it’s also attributable to a few other factors. 

For one - we’ve been making great inroads from a sales team standpoint. But I also think the timing’s very good for the product range. People want to swap out the Cokes of the world for something a bit more interesting. What we saw happening in beer and craft beer over the last 15 years is happening in soft drinks, and we feel very well positioned to capitalize on that.

I feel like you’ve been able to crack the code on operations recently - How does one achieve that? 

The first place to start is that we haven't quite cracked it yet ourselves, but we're getting close. We're actually just about to move to an amazing manufacturer who’s worked on huge brands, but it took us a while to get here - you have to start off with the small guys. 

The majority of the grey hairs that I’ve gotten from starting a business are from operational headaches. And honestly, there’s no secret - you just need to be incredibly clear and top of manufacturers. 

The thing that's especially difficult though is starting off with poor credit terms, which you can only build up over time. That's why you have such an intense need to raise money as a drinks company.  You have to pay for production, and then when you sell to a wholesaler, you sometimes don’t get paid for 90 days. So you have this gaping cashflow hole that you need to fill investment. So we’re actively working on fixing that cashflow cycle, getting variable credit terms, and ensuring we have a consistent quality of good. 

Let’s discuss the retail side of things too. You mentioned a great sales team and great inroads. What's the way key to getting into as many retailers as you guys have? 

It starts with product. Your product needs to be excellent, it needs to be on-trend and it needs to solve a problem

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One thing that we've really learnt is that buyers care about growing their category and they are very risk averse. So you need to do anything you can to remove that risk for them. For example: We were recently trying to get into an asian restaurant chain. In order to convince the buyer that this would work out, we presented our best case studies in similar outlets like Sticks & Sushi. That works - because it’s a proof point that’s so comparable that it de-risks their investment in you fully.  

And then - you gotta be what we call a charming pest. Stay front of mind for buyers and get their attention. We send buyers samples in fun ways. Sometimes we even put a mini disco ball inside our samples and have a bit of fun with it. 

Can you expand on who these gatekeepers are? How do you get to them? 

It really varies. For instance, we hounded Selfridges for a very long time because we felt that was our perfect audience for our launch. And that was a direct approach from us to them.

But recently we started working with a big wholesaler called Matthew Clark who’s been able to get us in hundreds of stores. It’s a chicken & egg situation always - you need wholesalers to get into retailers, and wholesalers require that retailers start requesting your product before they decide to work with you. 

In terms of getting to the retailers and wholesalers -  we actually outsource our sales to an agency called Glass Half Full - which represents a lot of sustainable drinks brands. We initially planned to hire a Head of Sales, but we met Glass Half Full shortly after we started looking and they've been fantastic. I think over time we would eventually like to bring it all in house, but when we're in the scale up phase, this approach makes a lot of sense.

Let’s touch on the e-commerce side of things. How important is the website to you? 

Ultimately it's your shop window. It's one of the first things a buyer will click on, and it has to be a true and positive reflection of your brand. So we’ve invested in it quite a bit and we’re happy with where it’s at. 

We’ve really  focused on conversion and reducing friction in the path to purchase, you can actually check out in 3 clicks from our homepage through our best-selling variety pack. We’re also putting a lot of emphasis on customer testimonials and quotes - it’s one of the most impactful ways to convert a first-time buyer. 

And financially, we hope eCommerce to be about 25% of revenue, it’s such a brilliant way of having a close relationship with your end customer. 

Tell me about marketing for Punchy - How do you spend your time? 

We have 3 always-on pillars. The first is paid social. The second is winning good press. And the third is gifting. 

On the paid social side, I’m very careful about how we’re spending money, and always keeping track of return on investment. Press is important because the reviews can help feed our ad creative strategy. And then for gifting, there’s not much of a science behind it - we don’t hand out affiliate links or anything, we just pick influencers who fit our customer personas and send them free Punchy. We gift about 10 packs a week. 

Final question: What would you attribute most of your success to?‍

First is asking the right questions. That's been a necessity for us to ask for help because none of us had done this before. The food drink community is just an incredibly lovely bunch, everyone's so helpful and forthcoming with time. 

And second is maintaining that passion for what you do, and harnessing that to make decisions quickly and roll with the punches.  As a team, we all flirted with burnout and we've all recognized that actively stepping away from our desk is sometimes more beneficial than staying at your desk for an extra hour. You’ve got to enjoy it rather than feeling like it's a chore. That’s how you stay in the game. 

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Paddy! Thank you sir! Love your drinks and can’t wait to see what happens next.